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The East African : January 13th 2014
COMMENTARY Why a ‘Marshall Plan’ is needed to solve Africa’s unemployment challenge Page 34 BUSINESS JANUARY 11-17,2014 DIFFICULT BEGINNING Regional food prices expected to go up The inc≥ease is att≥ibuted to a looming sho≥tage of the essential foods due to poo≥ weathe≥, inadequate fe≥tilise≥ supplies to fa≥me≥s and delayed planting FOREIGN EARNINGS Tanzania’s export value dropped in 2013 putting pressure on the country’s forex reserve Page 37 33 Low maize p≥oduction hampe≥s fish fa≥ming By MICHAEL WAKABI The EastAfrican A RISE in the cost of cereals such as maize will have implications on East Africa’s emerging aquaculture (also known as aquafarming) industry, which is battling rising prices for fish. While the rising cost of fish A JOINT REPORT The EastAfrican foods within the first half of the year due to projected poor weather, inadequate fertiliser supplies to farmers and delayed planting, further challenging policymakers to improve food security and control food-driven inflation. Economists and agriculturalists E have warned that some of the crops whose production is expected to decline are maize, wheat, rice and beans. Milk production is also expected to decline due to lack of pasture, following the onset of the dry season and the spread of animal diseases in some parts of the region. As a result, economists fear the prices of staple foodstuff like maize, beans, wheat products, milk, beef and mutton may increase, triggering a rise in inflation, which has so far remained at the single-digit level in all the five EAC member countries. In 2013, East African countries maintained single-digit inflation rates for most of the year, thanks to good harvests, which stabilised prices of food. In Uganda, a general decline in commodity prices coupled with low demand for goods and services helped the country maintain an annual inflation rate of 5.5 per cent in 2013, the lowest in two years. Kenya ended the year with an inflation rate of 7.2, a decline from 8.29 reported in September last year. Tanzania kept its inflation rate at an average of 6.20 per cent for the second half of last year while Rwanda ended the year with the lowest inflation rate at 4.58 per cent ast Africa is expected to record shortages of some of its essential MAIZE CONSUMPTION In Tanzania the price of a 50kg maize meal bag has gone up from Tsh36,000 ($22.5) to Tsh43,000 ($26.8). Kenyans consume an average of 940,000 bags of wheat every month, translating to 11.3 million bags a year. However, things are different in Uganda as the government is worried about an abundance of maize, occasioned by favourable rains in the second season of 2013. 28.9m are likely to increase the price of their products because they use electricity whose tariff was recently increased. The same will apply to rice because its polishing also requires electricity.” However, things are different in Uganda as the government is worried about an abundance of maize, which could lead to a decline in prices, with farmers being the biggest losers. The anticipated bountiful harvest has been occasioned by favourable rains in the second season of 2013. Okaasi Opolot, the director of Number of bags of maize that farmers in Kenya harvested in 2013 against a govt projection of 43.4 million bags down from 5.1 per cent recorded in October. Burundi recorded the highest inflation rate averaging 9.7 per cent, by the end of last year. In Kenya, prices of essential foodstuff, like maize, milk and wheat, are expected to increase in the early months as the effects of last year’s poor rains begin to be felt. The situation, experts warn, may be aggravated by the dry season, which is normally associated with water scarcity and lack of pasture. The situation is similar in Tanzania. Already, the price of a 50kg maize meal bag has gone up from Tsh36,000 ($22.5) to Tsh43,000 ($26.8). Hussein Kamote, the director of policy and research at the Confederation of Tanzania Industries said that: “Maize millers crop resources in the Ministry of Agriculture, Fisheries and Animal Husbandry said the government fears that maize prices could drastically drop. In Kenya, poor rains, last year’s general election, which coincided with the planting season and shortage of fertiliser, all led to reduced acreage of the crop. Research by Egerton University’s Tegemeo Institute of Agriculture, Policy and Development found that farmers harvested 28.9 million bags during last year’s long rains season against the government’s projected 43.4 million bags for 2013/2014 crop season, which ends early this year. On average, the country consumes 3.7 million bags of maize every month, translating to 44.4 million bags a year. Worsening the situation is the performance of the short rains, which was poor, short-lived and unevenly distributed. “The short rains were not good enough and we will definitely experience a decline in maize production,” said Anthony Kioko, chief executive officer at Kenya’s Grain Growers Association. The average price of a 2kg maize flour pack of popular brands ranges between Ksh100 ($1.2) and Ksh120 ($1.4) and there is fear the price might increase due to the shortage. According to Cabinet Secretary for Agriculture, Livestock and Fisheries Felix Koskei, as at December 31, last year, estimated maize stocks stood at 13.3 million bags with farmers holding 8.5 million bags, traders 2.1 million bags, millers 500,000 bags and the National Cereals and Produce Board 2.2 million bags. “Maize availability from domestic production is likely to be enough to cover up to May 2014. The expected shortfalls should be made through imports by the private sectors,” said Mr Koskei. Kenyans consume an average of 940,000 bags of wheat every month, translating to 11.3 million bags a year. However, Kenya does not produce enough wheat for consumption and relies heavily on imports. “We only produce 40 per cent of our wheat and import up to 60 per cent and things can be difficult if the crop does not perform well. However, so far the situation is still not bad but we will definitely need to import,” said Mr Kioko. Mr Koskei said the current wheat stocks available are estimated at 600,000 bags. According to the Agriculture Ministry, though the area under crop production increased by 13 per cent to 148,703 hectares in 2012 from 131,509 hectares in 2011 with challenges to increase production still enormous. “The crop still continues to experience challenges such as TURN TO PAGE 34 in regional markets has been blamed on the booming fish export business, Harrison Charo Karisa who heads Kenya’s National Aquaculture Research Development and Training Centre, says the high cost of fish in local markets — trending at $3-4 per kilogramme — is unlikely to come down until the cost of cereals, used to make feeds for fish, is reduced. In a presentation to the second scientific conference of the Association for Strengthening Agricultural Research in Eastern and Central Africa (ASARECA) in Bujumbura, Burundi last month, Mr Charo said fish feed was competing with poultry for inputs and coupled with human consumption of maize, the price of cereals would stay up, translating into higher prices for farmed fish. “Because fish feed is cereal based, the key to bringing down the cost of fish and increasing access to fish protein by the population is in increasing the productivity of maize,” he said. Infancy stage While it promises more predict- able supply of fish, aquaculture is still in its infancy in East Africa and is constrained by the high cost of inputs and low technology adoption. In Uganda, output from fish ponds is still low because most farmers still use poultry feed, which affects water quality. Conventional fish feed which floats on the water is considered too expensive by most farmers, stunting production. Kenya has been more suc- cessful with both the number of hatcheries and farmers as well as increasing output. Production from fish ponds increased to an estimated 24,000 tonnes in 2013 from 4,000 metric tonnes in 2009, while hatcheries rose to 147 from 20 over the same period.
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